Changes contained in the Localism Act 2011 and proposed in the Local Audit and Accountability Bill could unintentionally create an enabling environment for corruption in local government, it has been claimed.
In a report, Corruption in Local Government: The Mounting Risks, Transparency International said it had identified 16 recent legislative changes which increased the risk of corruption.
These are divided into audit arrangements and the new regime for regulating the conduct of elected members.
In relation to audit arrangements, Transparency International identified the following :
- The independence of internal and external audit, and of monitoring officers, financial officers and chief executives, is weakened because there is no longer an Audit Commission to act as a backstop and provide support;
- There will be no institution with wider powers of public audit to enable criminal investigations, which the Audit Commission used to have;
- There will be no institution to collect nationwide data on fraud and corruption or analyse trends;
- New external audit reports will not be adequately covered by the Freedom of Information Act;
- Local authorities will have a reduced internal capacity to investigate fraud and corruption, due to austerity measures;
- The responsibility for investigating and detecting fraud and corruption is being delegated to lower-level officers;
- Audit committees are weakened and may disappear because there is no longer a statutory requirement for an audit committee to be a full committee in its own right;
- External auditors appointed under the new arrangements may face incentives to avoid undertaking investigations or raising concerns about suspicions of fraud or corruption.
In relation to the new regime for regulating the conduct of elected members, the report said:
- There is no longer a universal code of conduct to provide clarity to members serving on different public authorities and committees;
- There is no longer a requirement for members to declare gifts and hospitality and no legal requirement for either a standards committee or the monitoring officer to check any register of interests on a regular basis;
- There is no longer a statutory requirement for a council to have a standards committee;
- There is no longer any obligatory sanction for members that violate the local codes of conduct, with overreliance on party discipline as a sanction;
- Since the abolition of Standards for England, there is no longer a national investigations body for misconduct;
- Some local authorities may struggle to appoint the required independent persons of the appropriate calibre and legitimacy to perform the new role that has been created under the self-regulation system;
- The system relies too heavily on the new offence of failing to declare a pecuniary interest – which is arguably unenforceable and misses the point that transparency is not sufficient to deter corruption;
- The ability of chief executives, financial officers and monitoring officers to hold elected members to account would be compromised by proposals to abolish their statutory employment protection.
Transparency International also pointed to a decline in scrutiny by local press and an increase in outsourcing to the private sector.
The report did, however, acknowledge a lack of agreement among experts as to the scale and prevalence of corruption in local government in the UK.
“Some argued that the cases that have come to light represent the tip of the iceberg,” it said. “Others felt equally strongly that the relatively small number of obvious corruption cases, and the fact that they had often been exposed by the existing oversight structures, was a sign that there is in fact no iceberg.”
Transparency International said its aim was to undertake an analysis of the institutional robustness and integrity of local government.
The report put forward 22 recommendations. These include that the Government should conduct a corruption risk assessment and strengthen whistleblowing procedures.
Robert Barrington, Executive Director of Transparency International UK, said: “Local government is undergoing substantial changes in the way it is audited, in the oversight of ethical conduct and in public accountability. We may not see the results for a decade. We are warning that one of the unintended consequences of these changes has been to create an enabling environment for corruption.
“While the majority of council workers and elected members observe high standards of conduct, the risk is that unethical public officials may exercise their power for private gain, unchecked by scrutiny, complaint, or the threat of punishment”.
A copy of Transparency International’s report can be viewed here.